In this article, we discuss the 10 stocks Reddit’s WallStreetBets is buying before earnings. If you want to skip our detailed analysis of these stocks, go directly to the 5 Stocks Reddit’s WallStreetBets is Buying Before Earnings.
The United States economy has roared back into life over the past few months after a torrid 2020 marred by COVID-19 lockdowns. Just before the US government released GDP figures that showed that the economy had grown beyond the pre-pandemic size, data released by Refinitiv, a financial market data and infrastructure firm, indicated that the largest companies in the country, often represented by the S&P 500 Index, were on track to smash market expectations on earnings for the second quarter.
According to the data research firm, the S&P 500 Index was actually set for the biggest quarterly earnings growth in more than a decade. In the days since the data was released, more than 120 companies on the index have released earnings results for the second quarter. A whopping 88% have beaten market estimates. As more firms prepare to release earnings reports, retail investors, who frequent internet platforms like Reddit, have started loading up stocks that are expected to soar following the release of their quarterly earnings.
Some of the stocks presently popular on the 10-million strong Reddit platform WallStreetBets include Activision Blizzard, Inc. (NASDAQ: ATVI), Match Group, Inc. (NASDAQ: MTCH), Lyft, Inc. (NASDAQ: LYFT), among others. These and others like them are discussed in detail below. Refinitiv estimates that earnings for the S&P 500 are expected to grow 78% year-on-year in the second quarter. The estimates seem realistic given that the S&P 500 has already soared by 90% compared to the lows of March 2020.
Investors should take advantage of this post-pandemic boom. Even big finance is capitalizing on the improving economy. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context in mind, here is our list of the 10 stocks Reddit’s WallStreetBets is buying before earnings. These were ranked keeping in mind the number of mentions on Reddit forum WallStreetBets, analyst ratings, business fundamentals, and hedge fund sentiment around each. All the firms listed below are expected to unveil their earnings results for the second quarter on August 3 or after the close of market on August 2.
Stocks Reddit’s WallStreetBets is Buying Before Earnings
10. Big 5 Sporting Goods Corporation (NASDAQ: BGFV)
Number of Hedge Fund Holders: 14
Big 5 Sporting Goods Corporation (NASDAQ: BGFV) is a California-based sporting goods retailer. It is placed tenth on our list of 10 stocks Reddit’s WallStreetBets is buying before earnings. The company is expected to post second quarter earnings after the close of the market on August 3. In earnings results for the first quarter, posted on May 4, the firm reported earnings per share of $0.90, beating market predictions by $0.040. The revenue over the period was $272 million, up 25% year-on-year.
On May 5, investment advisory Lake Street raised the price target on Big 5 Sporting Goods Corporation (NASDAQ: BGFV) stock to $26 from $19 and maintained a Buy rating, appreciating the quarterly earnings beat by the firm in the first three months of 2021.
At the end of the first quarter of 2021, 14 hedge funds in the database of Insider Monkey held stakes worth $27 million in Big 5 Sporting Goods Corporation (NASDAQ: BGFV), down from 17 in the preceding quarter worth $15 million.
Just like Activision Blizzard, Inc. (NASDAQ: ATVI), Match Group, Inc. (NASDAQ: MTCH), and Lyft, Inc. (NASDAQ: LYFT), Big 5 Sporting Goods Corporation (NASDAQ: BGFV) is one of the stocks Reddit’s WallStreetBets is buying before earnings.
9. Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS)
Number of Hedge Fund Holders: 16
Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is ranked ninth on our list of 10 stocks Reddit’s WallStreetBets is buying before earnings. The company markets aerospace and defense services and mostly works with the United States government. The company will post earnings results for the second quarter after the close of the market on August 3. In earnings results for the first quarter, posted in early May, the firm beat market expectations on revenue and earnings per share.
On July 26, investment advisory B Riley upgraded Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) stock to Buy from Neutral with a price target of $32, underlining that the demand for the products sold by the firm remained high.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Washington Harbour Partners is a leading shareholder in Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) with 475,989 shares worth more than $12 million.
Alongside Activision Blizzard, Inc. (NASDAQ: ATVI), Match Group, Inc. (NASDAQ: MTCH), and Lyft, Inc. (NASDAQ: LYFT), Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS) is one of the stocks Reddit’s WallStreetBets is buying before earnings.
8. SunPower Corporation (NASDAQ: SPWR)
Number of Hedge Fund Holders: 18
SunPower Corporation (NASDAQ: SPWR) is a company that offers solar solutions. It is headquartered in California and is placed eighth on our list of 10 stocks Reddit’s WallStreetBets is buying before earnings. The company stands to benefit from proposed new tax credits for solar manufacturing in the US. The company will post second quarter earnings after the close of the market on August 3. The firm missed market expectations on revenue in the first quarter but beat them on earnings per share.
On July 2, investment advisory Goldman Sachs maintained a Neutral rating on SunPower Corporation (NASDAQ: SPWR) stock but raised the price target to $25 from $22, highlighting that supply chain risks in the industry were lessening and could benefit the firm.
At the end of the first quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $182 million in SunPower Corporation (NASDAQ: SPWR), down from 24 in the previous quarter worth $345 million.
In addition to Activision Blizzard, Inc. (NASDAQ: ATVI), Match Group, Inc. (NASDAQ: MTCH), and Lyft, Inc. (NASDAQ: LYFT), SunPower Corporation (NASDAQ: SPWR) is one of the stocks Reddit’s WallStreetBets is buying before earnings.
7. Realty Income Corporation (NYSE: O)
Number of Hedge Fund Holders: 18
Realty Income Corporation (NYSE: O) is ranked seventh on our list of 10 stocks Reddit’s WallStreetBets is buying before earnings. The company is based in California and is structured as a real estate investment trust that focuses on investments in properties with long-term commercial leases. The firm will post second quarter earnings after the close of market on August 2. On July 14, the firm declared a monthly dividend of $0.2355 per share, in line with previous. The forward yield was 4.13%.
On June 3, investment advisory Mizuho upgraded Realty Income Corporation (NYSE: O) stock to Buy from Neutral with a price target of $77, noting that low rates, merger related synergies and recognition of prior period rents would improve earnings in the coming months.
At the end of the first quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $183 million in Realty Income Corporation (NYSE: O), down from 24 in the previous quarter worth $238 million.
Activision Blizzard, Inc. (NASDAQ: ATVI), Match Group, Inc. (NASDAQ: MTCH), and Lyft, Inc. (NASDAQ: LYFT) are some of the stocks Reddit’s WallStreetBets is buying before earnings, just like Realty Income Corporation (NYSE: O).
6. BP p.l.c. (NYSE: BP)
Number of Hedge Fund Holders: 29
BP p.l.c. (NYSE: BP) is an energy company headquartered in London. It is placed sixth on our list of 10 stocks Reddit’s WallStreetBets is buying before earnings. The share price of the firm had been soaring in recent weeks amid increased demand for oil as the economy reopened following the pandemic lockdowns and an impasse over production by oil producing countries. The company will post second quarter earnings before the opening of the market on August 3. The firm has a market cap of over $81 billion.
On July 23, investment advisory Piper Sandler reiterated an Overweight rating on BP p.l.c. (NYSE: BP) stock and raised the price target to $37 from $32, backing the firm to deliver solid results in the third quarter and beat market estimates on earnings in the second.
At the end of the first quarter of 2021, 29 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in BP p.l.c. (NYSE: BP), the same as in the previous quarter worth $927 million.
Activision Blizzard, Inc. (NASDAQ: ATVI), Match Group, Inc. (NASDAQ: MTCH), and Lyft, Inc. (NASDAQ: LYFT) are some of the stocks Reddit’s WallStreetBets is buying before earnings, alongside BP p.l.c. (NYSE: BP).
In its Q1 2020 investor letter, Broyhill Asset Management highlighted a few stocks and BP p.l.c. (NYSE: BP) was one of them. Here is what the fund said:
“As if a global pandemic wasn’t enough, during the quarter OPEC and Russia decided to add an oil crisis to the list of things for investors to panic about. After oil’s largest one-day decline in history, we established a small position in Exxon Mobile (XOM) and British Petroleum (BP)—two of the largest, best managed, and well capitalized companies in the industry.
We don’t have a short-term view on oil, but we do know that the best cure for low oil prices is low oil prices. And with the sector trading at its lowest level relative to the market in history, we are willing to bet that the current extremes in negative sentiment willrevert to more normal levels—and more normal oil prices—at some point. In the interim, we are being paid 10% annually to wait.”
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Disclosure. None. 10 Stocks Reddit’s WallStreetBets is Buying Before Earnings is originally published on Insider Monkey.
